Item 1.
|
Financial Statement
|
Our unaudited interim financial statements for the six months
ended June 30, 2019 form part of this quarterly report. They are stated in
United States Dollars (US$) and are prepared in accordance with United States
generally accepted accounting principles. These interim unaudited financial
statements should be read in conjunction with the companys audited financial
statements and the Form 10-K for the year ended December 31, 2018.
TRANSAKT LTD. AND SUBSIDIARIES
CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2019
3
TRANSAKT LTD.
CONDENSED CONSOLIDATED BALANCE
SHEETS
|
|
June 30,
|
|
|
December 31,
|
|
|
|
2019
|
|
|
2018
|
|
ASSETS
|
|
(Unaudited)
|
|
|
(Audited)
|
|
Current Assets
|
|
|
|
|
|
|
Cash and cash equivalents
|
$
|
128,581
|
|
$
|
227,088
|
|
Prepayments
|
|
-
|
|
|
12,000
|
|
Total Current Assets
|
$
|
128,581
|
|
$
|
239,088
|
|
Total Assets
|
$
|
128,581
|
|
$
|
239,088
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
Current Liabilities
|
|
|
|
|
|
|
Accrued expenses
|
$
|
26,656
|
|
$
|
37,287
|
|
Total Current Liabilities
|
$
|
26,656
|
|
$
|
37,287
|
|
|
|
|
|
|
|
|
Total liabilities
|
$
|
26,656
|
|
$
|
37,287
|
|
|
|
|
|
|
|
|
Stockholders' Equity
|
|
|
|
|
|
|
Common stock,
700,000,000 shares authorized for
|
|
|
|
|
|
|
issuance, $0.001 par value, 133,506,570
shares issued
|
|
|
|
|
|
|
and outstanding at June
30, 2019 and December 31
|
|
|
|
|
|
|
2018, respectively
|
|
133,506
|
|
|
133,506
|
|
Additional paid-in
capital
|
|
24,265,011
|
|
|
24,265,011
|
|
Accumulated deficit
|
|
(22,659,079
|
)
|
|
(22,558,836
|
)
|
Other comprehensive
income
|
|
(437,513
|
)
|
|
(437,880
|
)
|
Stock subscription receivable
|
|
(1,200,000
|
)
|
|
(1,200,000
|
)
|
Total Stockholders'
Equity
|
$
|
101,925
|
|
$
|
201,801
|
|
Non-controlling interest
|
|
-
|
|
|
-
|
|
Total Equity
|
$
|
101,925
|
|
$
|
201,801
|
|
|
|
|
|
|
|
|
Total Liabilities and Equity
|
$
|
128,581
|
|
$
|
239,088
|
|
F-1
TRANSAKT LTD.
CONDENSED CONSOLIDATED STATEMENTS
OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2019 AND 2018
(UNAUDITED)
|
|
Six Months
|
|
|
Six Months
|
|
|
Three Months
|
|
|
Three Months
|
|
|
|
Ended
|
|
|
Ended
|
|
|
Ended
|
|
|
Ended
|
|
|
|
June 30, 2019
|
|
|
June 30, 2018
|
|
|
June 30, 2019
|
|
|
June 30, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales, net
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
Cost of sales
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
Selling, general and administrative
|
|
|
|
|
|
|
|
|
|
|
|
|
expenses
|
|
(100,167
|
)
|
|
(99,531
|
)
|
|
(44,296
|
)
|
|
(45,491
|
)
|
Loss from operations
|
|
(100,167
|
)
|
|
(99,531
|
)
|
|
(44,296
|
)
|
|
(45,491
|
)
|
Other income (expense)
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income/
(expense)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
Currency exchange gain (loss)
|
|
(76
|
)
|
|
(108
|
)
|
|
(11
|
)
|
|
(102
|
)
|
Other income
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
Total other income (expenses)
|
|
(76
|
)
|
|
(108
|
)
|
|
(11
|
)
|
|
(102
|
)
|
(Loss)/ Profit before income taxes
|
|
(100,243
|
)
|
|
(99,639
|
)
|
|
(44,307
|
)
|
|
(45,593
|
)
|
Provision for income taxes expense
|
|
|
|
|
|
|
|
|
|
|
|
|
(benefit)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
Net (loss)/ profit
|
|
(100,243
|
)
|
|
(99,639
|
)
|
|
(44,307
|
)
|
|
(45,593
|
)
|
Net gain (loss) attributable to non-
|
|
|
|
|
|
|
|
|
|
|
|
|
controlling interest
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
Net (loss)/ profit attributable to
|
|
|
|
|
|
|
|
|
|
|
|
|
TRANSAKT
|
$
|
(100,243
|
)
|
$
|
(99,639
|
)
|
$
|
(44,307
|
)
|
$
|
(45,593
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted income (loss) common
|
|
|
|
|
|
|
|
|
|
|
|
|
stockholders per share Net loss
|
$
|
(0.0007
|
)
|
$
|
(0.0007
|
)
|
$
|
(0.0003
|
)
|
$
|
(0.0003
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares
|
|
|
|
|
|
|
|
|
|
|
|
|
outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted
|
|
133,506,570
|
|
|
133,506,570
|
|
|
133,506,570
|
|
|
133,506,570
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Comprehensive Income (Loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
$
|
(100,243
|
)
|
$
|
(99,639
|
)
|
$
|
(44,307
|
)
|
$
|
(45,593
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustment
|
|
367
|
|
|
71
|
|
|
(10
|
)
|
|
43
|
|
Comprehensive income (loss)
|
|
(99,876
|
)
|
|
(99,568
|
)
|
|
(44,317
|
)
|
|
(45,550
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income (loss) attributable
|
|
|
|
|
|
|
|
|
|
|
|
|
to the non-controlling interest
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
Comprehensive income (loss) attributable to TRANSAKT LTD.
|
$
|
(99,876
|
)
|
$
|
(99,568)
|
|
$
|
(44,317)
|
|
$
|
(45,550)
|
|
F-2
TRANSAKT LTD.
CONDENSED CONSOLIDATED
STATEMENTS OF SHAREHOLDERS EQUITY
FOR THE SIX MONTHS ENDED JUNE
30, 2019 and 2018 (UNAUDITED)
|
|
Common Stock
|
|
|
Additional
|
|
|
Stock
|
|
|
|
|
|
Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Paid-in
|
|
|
Subscription
|
|
|
Accumulated
|
|
|
Comprehensive
|
|
|
Treasury
|
|
|
Stock at Cost
|
|
|
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Receivable
|
|
|
Deficit
|
|
|
Income (loss)
|
|
|
Shares
|
|
|
Amount
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2017
|
|
133,506,570
|
|
$
|
133,506
|
|
$
|
24,265,011
|
|
$
|
(1,200,000
|
)
|
$
|
(22,350,526
|
)
|
$
|
(438,017
|
)
|
|
-
|
|
$
|
-
|
|
$
|
409,974
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(54,046
|
)
|
|
28
|
|
|
-
|
|
|
-
|
|
|
(54,018
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at March 31, 2018
|
|
133,506,570
|
|
$
|
133,506
|
|
$
|
24,265,011
|
|
$
|
(1,200,000
|
)
|
$
|
(22,404,572
|
)
|
$
|
(437,989
|
)
|
|
-
|
|
$
|
-
|
|
|
355,956
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(45,593
|
)
|
|
43
|
|
|
-
|
|
|
-
|
|
|
(45,550
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at June 30, 2018
|
|
133,506,570
|
|
$
|
133,506
|
|
$
|
24,265,011
|
|
$
|
(1,200,000
|
)
|
$
|
(22,450,165
|
)
|
$
|
(437,946
|
)
|
|
-
|
|
$
|
-
|
|
|
310,406
|
|
|
|
Common Stock
|
|
|
Additional
|
|
|
Stock
|
|
|
|
|
|
Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Paid-in
|
|
|
Subscription
|
|
|
Accumulated
|
|
|
Comprehensive
|
|
|
Treasury
|
|
|
Stock at Cost
|
|
|
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Receivable
|
|
|
Deficit
|
|
|
Income (loss)
|
|
|
Shares
|
|
|
Amount
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2018
|
|
133,506,570
|
|
$
|
133,506
|
|
$
|
24,265,011
|
|
$
|
(1,200,000
|
)
|
$
|
(22,558,836
|
)
|
$
|
(437,880
|
)
|
|
-
|
|
$
|
-
|
|
$
|
201,801
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(55,936
|
)
|
|
377
|
|
|
-
|
|
|
-
|
|
|
(55,559
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at March 31, 2019
|
|
133,506,570
|
|
$
|
133,506
|
|
$
|
24,265,011
|
|
$
|
(1,200,000
|
)
|
$
|
(22,614,772
|
)
|
$
|
(437,503
|
)
|
|
-
|
|
$
|
-
|
|
|
146,242
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(44,307
|
)
|
|
(10
|
)
|
|
-
|
|
|
-
|
|
|
(44,317
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at June 30, 2019
|
|
133,506,570
|
|
$
|
133,506
|
|
$
|
24,265,011
|
|
$
|
(1,200,000
|
)
|
$
|
(22,659,079
|
)
|
$
|
(437,513
|
)
|
|
-
|
|
$
|
-
|
|
|
101,925
|
|
The accompanying notes are an integral part of the financial
statements
F-3
TRANSAKT LTD.
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2019 AND 2018
(UNAUDITED)
|
|
Six Months Ended
|
|
|
Six Months Ended
|
|
|
|
June 30, 2019
|
|
|
June 30, 2018
|
|
Cash flows from operating activities
|
|
|
|
|
|
|
Net gain (loss) available to common
stockholders
|
$
|
|
|
$
|
|
|
|
|
(100,243
|
)
|
|
(99,639
|
)
|
Adjustments to reconcile net loss to
net cash used in operating activities:
|
|
|
|
|
|
|
Interest expenses
|
|
-
|
|
|
-
|
|
Changes in assets and liabilities:
|
|
|
|
|
|
|
Decrease (Increase) in prepayments
|
|
12,000
|
|
|
10,000
|
|
Decrease (Increase) in deposits
|
|
-
|
|
|
-
|
|
Increase (Decrease) in accounts payable
and accrued expenses
|
|
(10,631
|
)
|
|
(14,271
|
)
|
Net cash used in operating activities
|
|
(98,874
|
)
|
|
(103,910
|
)
|
|
|
|
|
|
|
|
Cash flows from investing activities
|
|
|
|
|
|
|
Net cash used in
investing activities
|
|
-
|
|
|
-
|
|
|
|
|
|
|
|
|
Cash flows from financing activities
|
|
|
|
|
|
|
Due to related party
|
|
-
|
|
|
-
|
|
Net cash provided by
financing activities
|
|
-
|
|
|
-
|
|
|
|
367
|
|
|
71
|
|
Effect of exchange rate changes on cash and
cash equivalents
|
|
|
|
|
|
|
|
|
(98,507
|
)
|
|
(103,839
|
)
|
Net increase (decrease) in cash and cash
equivalents
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
|
|
|
|
Beginning
|
|
227,088
|
|
|
435,630
|
|
Ending
|
$
|
|
|
$
|
|
|
|
|
128,581
|
|
|
331,791
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non cash financing activities
|
|
|
|
|
|
|
Issuance of common
stock to settle convertible promissory note and its
|
|
|
|
|
|
|
|
|
-
|
|
|
-
|
|
relevant accrued
interest
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental disclosure of cash flows
|
|
|
|
|
|
|
Cash paid during the year for:
|
|
|
|
|
|
|
Income
tax
|
|
-
|
|
|
|
|
|
|
|
|
|
-
|
|
Interest expense
|
$
|
-
|
|
$
|
-
|
|
The accompanying notes are an integral part of the financial
statements
F-4
TRANSAKT LTD.
NOTES TO THE UNAUDITED CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2019
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
Basis of Presentation
The accompanying unaudited condensed consolidated financial
statements have been prepared in accordance with generally accepted accounting
principles in the United States (GAAP) for interim financial reporting and in
accordance with instructions for Form 10-Q and Article 10 of Regulation S-X.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
In the opinion of management, the unaudited condensed consolidated financial
statements contained in this report reflect all adjustments that are normal and
recurring in nature and considered necessary for a fair presentation of the
financial position and the results of operations for the interim periods
presented. The year-end condensed balance sheet data was derived from audited
financial statements, but does not include all disclosures required by GAAP. The
results of operations for the interim period are not necessarily indicative of
the results expected for the full year. These unaudited, condensed consolidated
financial statements, footnote disclosures and other information should be read
in conjunction with the financial statements and the notes thereto included in
the Companys Annual Report on Form 10-K for the year ended December 31,
2018.
Organization
TransAKT Ltd. (the Company) was incorporated under the laws of
the Province of Alberta on June 3, 1997. The Company completed the acquisition
of Green Point Resources Inc. on October 18, 2000 whereby it became a publicly
traded company listed on the Canadian Venture Exchange. In 2004 the Company
voluntarily delisted from the TSX Venture Exchange and retained a listing on the
Over the Counter Bulletin Board in the United States.
In October 2004 the Company purchased certain assets of IP Mental
Inc., a Taiwan based Voice over Internet Protocol (VoIP) company. The company
name was changed from TransAKT Corp. to TransAKT Ltd. on September 29, 2006. The
Company designs and develops Voice over Internet Protocol (VoIP) solutions and
mobile payment terminals for the consumer electronics industry.
On November 15, 2006 TransAKT Ltd and the shareholders of Taiwan
Harlee International Co. Ltd. (HTT), entered into a Share Exchange Agreement in
which TransAKT Ltd. acquired 100% of Taiwan Harlee International Co. Ltd.s
outstanding common stock. HTT was incorporated under the laws of Republic of
China in 1985. HTT is engaged in designing, manufacturing and distribution of
Taiwan telecommunications equipment. The acquisition has been accounted for as a
reverse acquisition under the purchase method of accounting. Accordingly, the
merger of the two companies has been recorded as a recapitalization of HTT, with
HTT being treated as the continuing entity.
On August 12, 2010, the Company filed the Registration Statement
(Form S-4) in connection with the continuation of the Company from Alberta to
Nevada. Based upon the number of common shares of TransAKT Ltd., a Nevada
corporation (TransAKT Nevada), to be issued to the shareholders of TransAKT
Ltd., an Alberta corporation (TransAKT Alberta), on a one-for-one basis upon
completion of the Continuation and based on 102,645,120 shares of common stock
of TransAKT Ltd., an Alberta corporation, issued and outstanding as of August
12, 2010.
The Articles of Conversion of TransAKT Nevada provides that the
authorized capital of the TransAKT will be 300,000,000 shares of common stock,
par value $0.001 per share and 200,000,000 shares of preferred stock, par value
$0.001 per share.
F-5
On July 26, 2012, the Company acquired 100% equity of Vegfab
Agricultural Technology Co. Ltd. (the Vegfab), a company incorporated under
the laws of the Republic of China (ROC, Taiwan). Vegfab is mainly engaged in
selling agricultural equipment used to grow vegetables using simulated sunlight
from LED lamps in hydroponic systems.
On January 4, 2013, the Company entered into a Share Purchase and
Sale Agreement with a shareholder pursuant to which the Company sold to him 100%
of all issued and outstanding securities of its wholly owned subsidiary Taiwan
Harlee International Corporation (HTT). In consideration of the sale of HTT,
the shareholder has transferred to the Company 45,000,000 previously issued
common voting shares of TransAKT with a deemed value of $0.04 per share or $1.8
million in the aggregate.
On October 30, 2013, Million Talented Ltd., a third party,
contributed $516 (equals to HKD 4,000) to obtain 40% ownership of TransAKT Bio
Agritech Ltd., formerly named as TransAKT (H.K) Ltd., (TransAKT H.K.).
TransAKT H.K. was incorporated in Hong Kong on November 20, 2007. It had no
operation until 2013. TransAKT H.K.'s primary business is conducting research
and development on new agricultural technology relating to the Companys
business. On May 6, 2015, the company acquired the remaining 40% of the TransAKT
Bio Agritech Ltd. From Million Talent Ltd. As such, the Company wholly owned its
subsidiary of TransAKT Bio Agritech Ltd. And it becomes our primary business
unit.
On June 30, 2015, the wholly owned subsidiary, TransAKT Taiwan
Ltd., entered into a Share Transfer Agreement among Vegfab Agricultural
Technology Co. Ltd. and a third party pursuant to which the third party acquired
100% of Vegfab Agricultural Technology Co. Ltd. in consideration of $100,000.
Vegfab Agricultural Technology Co. Ltd. was the sole material asset of TransAKT
Taiwan Ltd. and its parent company (and subsidiary of the Company), TransAKT
Holdings Ltd., a Turks and Caicos company. Subsequent to the sale of Vegfab
Agricultural Technology Co. Ltd., pursuant to a Share Purchase Agreement dated
June 30, 2015 with the Companys former President, Chief Executive Officer and
Director, the Company sold TransAKT Holdings Ltd. (and its subsidiary, TransAKT
Taiwan Ltd.) to the former (non-affiliated) officer and director in
consideration of $100,000. All intercompany debts between TransAKT Holdings Ltd.
and the formerly affiliated companies were cancelled as a result of the
transaction.
A 20 to 1 reversed stock split was approved by the Board of
Directors on November 9, 2015, by majority of shareholders on April 1, 2016, by
FINRA on June 20, 2016 and effective on June 23, 2016. The issued and
outstanding common stock was consolidated from 613,447,306 to 30,672,387 with
fractional share round up to 1 share.
Principles of Consolidation
The consolidated financial statements include the accounts of
TransAKT (BVI) Ltd. and its wholly owned subsidiary TransAKT Bio Agritech Ltd.,
collectively referred to within as the Company. All material intercompany
accounts, transactions, and profits have been eliminated in consolidation.
Going Concern
The Company has incurred a net loss attributable to common
stockholders of $100,243 and $99,639 during the six months ended June 30, 2019
and 2018, respectively, and had an accumulated deficit of $22,659,079 and
$22,558,836 as of June 30, 2019 and December 31, 2018, respectively.
The accompanying consolidated financial statements have been
prepared assuming that the Company will continue as a going concern. This basis
of accounting contemplates the recovery of the Companys assets and the
satisfaction of liabilities in the normal course of business. This presentation
presumes funds will be available to finance ongoing research and development,
operations and capital expenditures and permit the realization of assets and the
payment of liabilities in the normal course of operations for the foreseeable
future.
F-6
There can be no assurances that there will be adequate financing
available to the Company and the consolidated financial statements do not
include any adjustments to reflect the possible future effects on the
recoverability and classification of assets or the amounts and classification of
liabilities that may result from the outcome of this uncertainty.
The Company has taken certain restructuring steps to provide the
necessary capital to continue its operations. These steps included: (1) tightly
budgeting and controlling all expenses; (2) The Company plans to continue
actively seeking additional funding opportunities to improve and expand upon our
product lines.(3)The Company is seeking for other business opportunities to
create sources of income.
Use of Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles in the United States (GAAP) requires
management to make certain estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could differ
from those estimates.
Revenue Recognition
Revenues are recognized when finished products are shipped to
customers and both title and the risks and rewards of ownership are transferred
and collectability is reasonably assured. The Companys revenues are recorded
upon confirmed acceptance after inspection by the customers of the Company.
Exchange Gain (Loss):
During the six months ended June 30, 2019 and 2018, the
transactions of TransAKT Bio Agritech Ltd. were denominated in foreign currency
and were recorded in Hong Kong Dollar (HKD) at the rates of exchange in effect
when the transactions occur. Exchange gains and losses are recognized for the
different foreign exchange rates applied when the foreign currency assets and
liabilities are settled.
Translation Adjustment
The Company financial statements are presented in the U.S. dollar
($), which is the Companys reporting currency, while its functional currency is
Hong Kong Dollar (HKD). Transactions in foreign currencies are initially
recorded at the functional currency rate ruling at the date of transaction. Any
differences between the initially recorded amount and the settlement amount are
recorded as a gain or loss on foreign currency transaction in the consolidated
statements of income. Monetary assets and liabilities denominated in foreign
currency are translated at the functional currency rate of exchange ruling at
the balance sheet date. Any differences are taken to profit or loss as a gain or
loss on foreign currency translation in the statements of income.
In accordance with ASC 830, Foreign Currency Matters, the Company
translates the assets and liabilities into U.S. dollar ($) using the rate of
exchange prevailing at the balance sheet date and the statements of operations
and cash flows are translated at an average rate during the reporting period.
Adjustments resulting from the translation from HKD into U.S. dollar are
recorded in stockholders equity as part of accumulated other comprehensive
income.
Comprehensive Income
Comprehensive income includes accumulated foreign currency
translation gains and losses. The Company has reported the components of
comprehensive income on its statements of stockholders equity.
Advertising
Advertising expenses consist primarily of costs of promotion for
corporate image and product marketing and costs of direct advertising. The
Company expenses all advertising costs as incurred.
F-7
Income Taxes
The Company accounts for income taxes in accordance with ASC 740,
Income Taxes, which requires that the Company recognize deferred tax liabilities
and assets based on the differences between the financial statement carrying
amounts and the tax basis of assets and liabilities, using enacted tax rates in
effect in the years the differences are expected to reverse. Deferred income tax
benefit (expense) results from the change in net deferred tax assets or deferred
tax liabilities. A valuation allowance is recorded when, in the opinion of
management, it is more likely than not that some or all of any deferred tax
assets will not be realized.
Statement of Cash Flows
In accordance with generally accepted accounting principles
(GAAP), cash flows from the Companys operations are based upon the local
currencies. As a result, amounts related to assets and liabilities reported on
the statement of cash flows will not necessarily agree with changes in the
corresponding balances on the balance sheet.
Concentration of Credit Risk
Financial instruments that potentially subject the Company to
concentrations of credit risk are accounts receivable and other receivables
arising from its normal business activities. The Company has a diversified
customer base. The Company controls credit risk related to accounts receivable
through credit approvals, credit limits and monitoring procedures. The Company
routinely assesses the financial strength of its customers and, based upon
factors surrounding the credit risk, establishes an allowance, if required, for
uncollectible accounts and, as a consequence, believes that its accounts
receivable credit risk exposure beyond such allowance is limited.
Cash and Cash Equivalents
Cash and cash equivalents include cash in hand and cash in time
deposits, certificates of deposit, and all highly liquid debt instruments with
original maturities of three months or less.
Fair Value of Financial Instruments
In the first quarter of fiscal year 2008, the Company adopted
Accounting Standards Codification subtopic 820-10, Fair Value Measurements and
Disclosures (ASC 820-10). ASC 820-10 defines fair value, establishes a
framework for measuring fair value, and enhances fair value measurement
disclosure. ASC 820-10 delays, until the first quarter of fiscal year 2009, the
effective date for ASC 820-10 for all non-financial assets and non-financial
liabilities, except those that are recognized or disclosed at fair value in the
financial statements on a recurring basis (at least annually). The adoption of
ASC 820-10 did not have a material impact on the Companys financial position or
operations.
Effective October 1, 2008, the Company adopted Accounting
Standards Codification subtopic 820-10, Fair Value Measurements and Disclosures
(ASC 820-10) and Accounting Standards Codification subtopic 825-10, Financial
Instruments (ASC 825-10), which permits entities to choose to measure many
financial instruments and certain other items at fair value. Neither of these
statements had an impact on the Companys unaudited condensed consolidated
financial position, results of operations or cash flows. The carrying value of
cash and cash equivalents, accounts payable and short-term borrowings, as
reflected in the balance sheets, approximate fair value because of the
short-term maturity of these instruments.
Stock-based Compensation
The Company records stock-based compensation expense pursuant to
ASC 718-10, "
Share Based Payment Arrangement
, which requires companies
to measure compensation cost for stock-based employee compensation plans at fair
value at the grant date and recognize the expense over the employee's requisite
service period. The Companys expected volatility assumption is based on the
historical volatility of Companys stock or the expected volatility of similar
entities. The expected life assumption is primarily based on historical exercise
patterns and employee post-vesting termination behavior. The risk-free interest
rate for the expected term of the option is based on the U.S. Treasury yield
curve in effect at the time of grant.
F-8
Stock-based compensation expense is recognized based on awards
expected to vest, and there were no estimated forfeitures as the Company has a
short history of issuing options. ASC 718-10 requires forfeitures to be
estimated at the time of grant and revised in subsequent periods, if necessary,
if actual forfeitures differ from those estimates.
Net Loss Per Share
The Company has adopted Accounting Standards Codification subtopic
260-10, Earnings Per Share (ASC 260-10) which specifies the computation,
presentation and disclosure requirements of earnings per share information.
Basic earnings per share have been calculated based upon the weighted average
number of common shares outstanding. Common equivalent shares are excluded from
the computation of the diluted loss per share if their effect would be
anti-dilutive.
Intangible Assets
Intangible assets include a patent. With the adoption of FASB ASC
Topic 350, Intangibles (formerly SFAS No. 142), intangible assets with a
definite life are amortized on a straight-line basis. The patent is being
amortized over its estimated life of 10 years. Intangible assets with a definite
life are tested for impairment whenever events or circumstances indicate that a
carrying amount of an asset (asset group) may not be recoverable. An impairment
loss would be recognized when the carrying amount of an asset exceeds the
estimated undiscounted cash flows used in determining the fair value of the
asset. The amount of the impairment loss to be recorded is calculated by the
excess of the assets carrying value over its fair value. Fair value is
generally determined using a discounted cash flow analysis. Costs related to
internally develop intangible assets are expensed as incurred.
Recent Accounting Pronouncements
The FASB has issued Accounting Standards Update (ASU) No. 2019-01,
Leases (Topic 842): Codification Improvements.
The new ASU aligns the guidance for fair value of the underlying
asset by lessors that are not manufacturers or dealers in Topic 842 with that of
existing guidance. As a result, the fair value of the underlying asset at lease
commencement is its cost, reflecting any volume or trade discounts that may
apply. However, if there has been a significant lapse of time between when the
underlying asset is acquired and when the lease commences, the definition of
fair value (in Topic 820, Fair Value Measurement) should be applied.
The ASU also requires lessors within the scope of Topic 942,
Financial ServicesDepository and Lending, to present all principal payments
received under leases within investing activities.
Finally, the ASU exempts both lessees and lessors from having to
provide certain interim disclosures in the fiscal year in which a company adopts
the new leases standard.
NOTE 2 - RELATED PARTY TRANSACTIONS
Related party sales
There were no transactions between the Company and any related
party for the six months ended June 30, 2019 and 2018, respectively.
Due to related parties
As of June 30, 2019 and December 31, 2018, there was no payable
due to related parties.
F-9
NOTE 3
SUBSEQUENT EVENTS
The Company evaluated all events or transactions that occurred
after June 30, 2019 up through the date the Company issue these financial
statements and found no material subsequent events are required to be disclosed.
******
F-10
Item 2. Managements Discussion and Analysis of Financial
Condition and Results of Operations
This quarterly report contains forward-looking statements. These
statements relate to future events or our future financial performance. In some
cases, you can identify forward-looking statements by terminology such as may,
should, expects, plans, anticipates, believes, estimates,
predicts, potential or continue or the negative of these terms or other
comparable terminology. These statements are only predictions and involve known
and unknown risks, uncertainties and other factors, including the risks in the
section entitled Risk Factors, that may cause our or our industrys actual
results, levels of activity, performance or achievements to be materially
different from any future results, levels of activity, performance or
achievements expressed or implied by these forward-looking statements.
Although we believe that the expectations reflected in the
forward-looking statements are reasonable, we cannot guarantee future results,
levels of activity, performance or achievements. Except as required by
applicable law, including the securities laws of the United States, we do not
intend to update any of the forward-looking statements to conform these
statements to actual results.
Our financial statements are stated in United States Dollars (US$)
and are prepared in accordance with United States Generally Accepted Accounting
Principles.
In this quarterly report, unless otherwise specified, all dollar
amounts are expressed in United States dollars and all references to common
shares refer to the common shares in our capital stock.
As used in this current report and unless otherwise indicated, the
terms "we", "us" and "our" mean TransAKT Ltd., a Nevada corporation, and our
wholly owned subsidiary, TransAKT Bio Agritech Ltd. in Hong Kong (S.A.R).
General Overview
TransAKT Ltd. was incorporated in the Province of British Columbia
on December 10, 1996 as Green Point Resources Inc. On October 18, 2000, we
changed our name to Wildcard Wireless Solutions Inc. On June 30, 2001, we filed
Articles of Continuance in the Province of Alberta and became an Alberta
corporation. On that same day, we conducted an amalgamation with Wildcard
Communications Canada Inc., an Alberta corporation, our wholly-owned subsidiary,
wherein Wildcard Communications Canada was merged into Wildcard Wireless
Solutions Inc. On June 20, 2003, we changed our name to TransAKT Corp. We
changed our name from TransAKT Corp. to TransAKT Ltd. on July 12, 2006.
Effective December 2, 2010, following approval by our shareholders on November
17, 2010, we re-domesticated our company from the Province of Alberta, Canada
and became a Nevada corporation.
We have operated principally as a research and development company
since our inception. Initial seed capital has been directed toward areas of
product research and development, patent filings and administration. We
initially focused on the research, design, development and manufacturing of
mobile payment terminals. However, the sale of these payment terminals reached
its end-of life due to changes in cellular phone regulations and limited
acceptance in the marketplace.
In October 2004, we purchased the existing business and certain
assets of IP Mental Inc., a Taiwan-based Voice over Internet Protocol (VoIP)
hardware and software provider. On November 15, 2006, we acquired Taiwan Harlee
International Co. Ltd. (HTT), a Taiwan-based leading designer, manufacturer
and distributor of telecommunications equipment, including specialized
VoIP-compatible phone systems. These acquisitions were intended to enable us to
remain competitive in the marketplace. Our current business is the design,
development and manufacturing of telecommunications equipment, including VoIP
compatible telephone systems and multi-line cordless telephone systems.
3
On November 15, 2006, we acquired HTT, for the sum of $5,000,000.
The purchase price was paid by the delivery to the shareholders of HTT of: (i)
$200,000 in cash; (ii) $300,000 in a promissory note from us due in cash six
months after closing; (iii) 50,000,000 of our common voting shares, with a
deemed value of $0.09 per share; and (iv) 5,000,000 of our common voting shares
issued to Mr. James Wu as performance-based compensation. Other than the
acquisitions of IP Mental Inc. and HTT, we have generally only had capital
expenditures on computer equipment, tools and dies, patents, and trademarks.
We have mainly financed our operations through the use of debt and
the issuance of equity in private placements. In October 2006, we repaid a loan
we took against inventory produced to fund our first commercial run of our
payment terminals. We settled the loan for $90,000 using funds raised from the
private placement of our shares. In the short-term and until our sales are
sufficient to fund operations, we will continue to finance our operations
through debt or equity financing.
On August 12, 2010, we filed a Form S-4 Registration Statement in
connection with the continuation of our company from Alberta to Nevada. We
registered 102,645,120 shares of common stock of TransAKT Ltd. (Nevada) which
were issued to the shareholders of TransAKT Ltd. (Alberta) on a one-for-one
basis to the number of shares held by them.
Effective June 25, 2012, the Nevada Secretary of State accepted
for filing of a certificate of amendment, wherein, we amended our articles of
incorporation to increase the authorized number of shares of our common stock
from 300,000,000 to 700,000,000 shares of common stock, par value of $0.001 per
share. Our preferred stock remains unchanged.
On May 3, 2012, we entered into an Asset Purchase and Sale
Agreement with Vegfab Agricultural Technology Co. Ltd. (Vegfab), a Taiwanese
corporation, pursuant to which we intended to acquire the material assets of
Vegfab. Vegfab is in the business of manufacturing innovative indoor
agricultural equipment used to grow a large variety of vegetables and fruit
using simulated sunlight from LED lamps in a proprietary hydroponic system.
Vegfabs product line includes systems for commercial production and a home
growing system which allows families to grow safe and clean fruit and vegetables
in their own homes. Prior to completion of the transaction we and Vegfab elected
instead to proceed by way of a share purchase and, effective July 16, 2012, we
acquired all outstanding securities of Vegfab. In consideration of the Vegfab
securities, we had paid $1,000,000 in cash and issued 150,000,000 shares of our
common stock to the shareholders of Vegfab which constituted approximately 37.2%
of our common stock at the time of closing. As a result of the transaction
Vegfab became our wholly owned subsidiary and primary business unit. Vegfab has
since become engaged in the operation of a plant factory in Taiwan for the
production of pesticide-free vegetables.
Previously, we entered into a performance compensation agreement
dated June 15, 2006 with James Wu, our president and chief executive officer,
pursuant to which our company was required to pay Mr. Wu share compensation of
10% of the value of any venture acquisition that Mr. Wu secured for our company.
As a result, in July 2012, we issued to Mr. Wu 18,333,333 shares of our
companys common stock with respect to the acquisition of Vegfab.
On January 4, 2013, we entered into a share purchase and sale
agreement with Mr. Pan Yen Chu pursuant to which we sold to Mr. Pan 100% of all
issued and outstanding securities in our wholly owned subsidiary HTT. In
consideration of the sale of HTT, Mr. Pan has transferred to our company
45,000,000 previously issued common voting shares of our company with a deemed
value of $0.04 per share or $1.8 million in the aggregate. The transfer of
common shares was completed on January 7, 2013. In connection with the sale HTT,
the 45,000,000 common shares of our company received as consideration will be
returned to treasury. The 45,000,000 shares constitute approximately 11.5% of
our companys currently issued and outstanding common stock.
On October 30, 2013, Million Talent Ltd., a third party,
contributed $516 (equals to HKD 4,000) to obtain 40% ownership of TransAKT Bio
Agritech Ltd., formerly named as TransAKT (H.K) Ltd., (TransAKT H.K.).
TransAKT H.K. was incorporated in Hong Kong on November 20, 2007. It had no
operation until 2013. TransAKT H.K.'s primary business is conducting research
and development on new agricultural technology relating to the Companys
business. On May 6, 2015, the Company acquired the remaining 40% of the equity
interest from Million Talent Ltd. As such, the Company wholly owned its
subsidiary of TransAKT BIO Agritech Ltd.
4
On June 30, 2015, our wholly owned subsidiary, TransAKT Taiwan
Ltd., entered into a Share Transfer Agreement among Vegfab Agricultural
Technology Co. Ltd. and a third party pursuant to which the third party acquired
100% of of Vegfab Agricultural Technology Co. Ltd. in consideration of $100,000.
Vegfab Agricultural Technology Co. Ltd. was the sole material asset of TransAKT
Taiwan Ltd. and its parent company (and subsidiary of the Company), TransAKT
Holdings Ltd., a Turks and Caicos company. Subsequent to the sale of Vegfab
Agricultural Technology Co. Ltd., pursuant to a Share Purchase Agreement dated
June 30, 2015 with the Companys former President, Chief Executive Officer and
Director, the Company sold TransAKT Holdings Ltd. (and its subsidiary, TransAKT
Taiwan Ltd.) to the former (non-affiliated) officer and director in
consideration of $100,000. All intercompany debts between TransAKT Holdings Ltd.
and the formerly affiliated companies were cancelled as a result of the
transaction.
A 20 to 1 reversed stock split was approved by the Board of
Directors on November 9, 2015, by majority of shareholders on April 1, 2016, by
FINRA on June 20, 2016 and effective on June 23, 2016. The issued and
outstanding common stock was consolidated from 613,447,306 to 30,672,387 with
each fractional share round up to 1 share.
Our Current Business
We began operations in 1997 and commercialized our first product
line of wireless point-of-sale (WPOS) terminals in April 2003. With the use of
cellular phones, these terminals allow merchants to accept payments anywhere,
anytime. However, our WPOS terminals were discontinued due to changes in
cellular phone regulations and limited acceptance in the marketplace. In October
2004, through the acquisition of the business and certain assets of IP Mental
Inc., we entered the VoIP business. On November 15, 2006, we acquired Taiwan
Harlee International Co. Ltd. (HTT), a Taiwan-based leading designer,
manufacturer and distributor of telecommunications equipment, including
specialized VoIP-compatible phone systems. These acquisitions were intended to
enable us to remain competitive in the VoIP marketplace by engaging in the
design, development, manufacturing and sale of telecommunications equipment,
including VoIP compatible telephone systems and multiline cordless telephone
systems.
Effective July 16, 2012, we acquired all outstanding securities of
Vegfab Agricultural Technology Co. Ltd. (Vegfab), a Taiwanese corporation,
With the acquisition of Vegfab we entered the business of manufacturing
agricultural equipment used to grow a large variety of vegetables and fruit
using simulated sunlight from LED lamps in a proprietary hydroponic system.
Vegfabs product line includes systems for commercial production and a home
growing system which allows families to grow safe and clean fruit and vegetables
in their own homes. Vegfab has since become engaged in the operation of a plant
factory in Taiwan for the production of pesticide-free vegetables.
Concurrently with our acquisition of Vegfab, our management began
planning our exit from the VoIP telecommunications business owing to diminishing
growth opportunities for our Company in that industry. Subsequently, on January
4, 2013, we entered into a share purchase and sale agreement with Mr. Pan Yen
Chu pursuant to which we sold to Mr. Pan 100% of all issued and outstanding
securities in our wholly owned subsidiary HTT in consideration for the
cancellation and return to treasury of 45,000,000 previously issued common
voting shares of our company with a deemed value of $0.04 per share or $1.8
million in the aggregate. The transfer of common shares was completed on January
7, 2013. The 45,000,000 shares constitute approximately 11.5% of our companys
currently issued and outstanding common stock.
As a result of our sale of HTT and Vegfab Agricultural Technology
Co. Ltd., TransAKT BIO Aritech Ltd. has become our primary business unit.
Subsequent to our sale of Vegfab, we continue to be engaged in the
sale and distribution of indoor agricultural equipment, including lighting,
irrigation and hydroponic growing systems. We purchase inventory from third
party manufacturers and re-sell equipment to various indoor agricultural
operators located in Asia. Our primary markets are Taiwan, Hong Kong, Mainland
China, and Singapore.
5
We incurred a net loss attributable to common stockholders of
$100,243 and $99,639 during the six months ended June 30, 2019 and 2018,
respectively, and had an accumulated deficit of $22,659,079 and $22,558,836 as
of June 30, 2019 and December 31, 2018, respectively. In addition, we expect to
incur an operating loss in the 2019 fiscal year.
As at the date of this annual report, we are actively seeking
opportunities to diversify our business and to enhance shareholder value. In
particular, we are investigating potential opportunities to enter the Chinese
health food market, with an emphasis on traditional Chinese herbs known as
cordyceps. In that regard, we have recently identified and are in negotiations
with a potential joint-venture partner engaged in research, manufacture,
processing and sales of cordyceps. Importantly, however, there is no guarantee
that our negotiations will be successful or that we will successfully identify
or secure other opportunities to diversify our business.
Cash Requirements
We used cash in operations of $98,874 for the six months ended
June 30, 2019. We continue to be dependent on the proceeds of equity and
non-equity financing to fund our operations. No assurances can be given that our
actual cash requirements will fall within our budget, that anticipated revenues
will be realized when needed, that lines of credit will be available to us if
required, or that additional capital will be available to us. We anticipate that
over the next twelve months, beginning January 1, 2019, we will need a
approximately $250,000 to sustain our operations and market our products
effectively.
Our plan of operations for fiscal 2019 includes the following
budgeted expenditures:
12 Month Capital Requirements Forecast
|
USD
1
|
|
Beginning January 1, 2019
|
|
|
Salaries
|
$120,000
|
Accounting and Legal Expenses
|
$50,000
|
Public company reporting costs
|
$20,000
|
Selling, general and administrative expense
|
$5,000
|
Contingency
|
$55,000
|
Total
|
$250,000
|
|
1.
|
Based on 2019 average exchange rate of
$0.128
|
As of
August 14, 2019
, we will require additional financing of
approximately $250,000 to execute our business strategy for fiscal 2019. If we
are unable to raise sufficient financing, we intend to scale back our business
in order to accommodate available financing or revenue streams derived from our
current operations.
6
Results of Operations for the Three Months Ended June 30,
2019 and 2018
Our operating results for the three months ended June 30, 2019
and 2018 are summarized as follows:
|
Three
Months ended
June 30, 2019
($)
|
Three
Months ended
June 30, 2018
($)
|
Operating revenues
Operating costs and expenses
|
-
(44,296)
|
-
(45,491)
|
Loss from operations
|
(44,296)
(11)
-
|
(45,491)
(102)
-
|
Other expenses
Provision for income taxes expense (benefit)
|
Net loss
|
(44,307)
|
(45,593)
|
Net loss attributable to non-controlling interest
|
-
|
-
|
Net loss attributable to TRANSAKT LTD.
|
(44,307)
|
(45,593)
|
|
(0.0003)
|
(0.0003)
|
Net loss per share (basic and diluted)
|
Net Revenues and Cost of Sales
There was no revenues for the three months ended June 30, 2019 and
2018 respectively.
Operating Expenses
Operating expenses were $44,296 for the three months ended June
30, 2019, compared to $45,491 for the three months ended June 30, 2018,
representing a decrease of $1,195. The decrease in operating expenses was
primarily due to the tightening budget during the period.
Loss from Operations
Loss from operations were $44,296 for the three months ended June
30, 2019, compared to $45,491 for the three months ended June 30, 2018,
representing a decrease of $1,195. The decrease in operating loss was primarily
due to the tightening budget during the period.
Other Income or Expenses
Other expenses were decreased by approximately $91 to $11 for the
three months ended June 30, 2019 from $102 for the same period in 2018. The
decrease was due to the exchange rate difference.
Net Income (Loss) attributable to TRANSAKT LTD.
As a result of the above factors, we have net loss attributable to
the Companys common stockholders of approximately $44,307 for the three months
ended June 30, 2019 compared to a loss of $45,593 for the three months ended
June 30, 2018, representing a decrease of $1,286 or approximately 2.8% .
7
Results of Operations for the Six Months Ended June 30,
2019 and 2018
Our operating results for the six months ended June 30, 2019
and 2018 are summarized as follows:
|
Six Months ended
June 30, 2019
($)
|
Six Months ended
June 30, 2018
($)
|
Operating revenues
Operating costs and expenses
|
-
(100,167)
|
-
(99,531)
|
Loss from operations
|
(100,167)
(76)
-
|
(99,531)
(108)
-
|
Other expense
|
Provision for income taxes expense (benefit)
|
Net loss
|
(100,243)
|
(99,639)
|
Net loss attributable to non-controlling interest
|
-
|
-
|
Net loss attributable to TRANSAKT LTD.
|
(100,243)
|
(99,639)
|
|
(0.0007)
|
(0.0007)
|
Net loss per share (basic and diluted)
|
Net Revenues and Cost of Sales
There were no revenues for the six months ended June 30, 2019 and
2018 respectively.
Operating Expenses
Operating expenses were $100,167 for the six months ended June 30,
2019, compared to $99,531 for the six months ended June 30, 2018, representing a
increase of $636. The increase in operating expenses was primarily due to the
increase of administrative expense during the period.
Loss from Operations
Loss from operations were $100,167 for the six months ended June
30, 2019, compared to $99,531 for the six months ended June 30, 2018,
representing a increase of $636. The increase in loss from operations was
primarily due to the increase of administrative expenses during the
period.
Other Income or Expenses
Other expenses decreased by approximately $32 to $76 for the six
months ended June 30, 2019 from $108 for the same period in 2018. The decrease
was mainly due to the currency exchange rate difference during the period .
Net Income (Loss) attributable to TRANSAKT LTD.
As a result of the above factors, we have net loss attributable to
the Companys common stockholders of $100,243 for the six months ended June 30,
2019 compared to $99,639 for the six months ended June 30, 2018, representing a
increase of $604.
8
Liquidity and Capital Resources
Our financial position as of June 30, 2019 and December 31,
2018 and the changes for the periods ended are as follows:
Working Capital
|
|
|
|
|
|
|
|
|
As of
|
|
|
As of
|
|
|
|
June 30, 2019
|
|
|
December 31, 2018
|
|
Current Assets
|
$
|
128,581
|
|
$
|
239,088
|
|
Current Liabilities
|
$
|
26,656
|
|
$
|
37,287
|
|
Working Capital
|
$
|
101,925
|
|
$
|
201,801
|
|
Our working capital decreased from $201,801 at December 31,
2018 to $101,925 at June 30, 2019, primarily as a result of the operating loss
during the period.
Cash Flows
|
|
|
|
|
|
|
|
|
Six months
|
|
|
Six months
|
|
|
|
Ended
|
|
|
Ended
|
|
|
|
June 30, 2019
|
|
|
June 30, 2018
|
|
Net cash used in operating activities
|
$
|
(98,874
|
)
|
$
|
(103,910
|
)
|
Net cash used in investing activities
|
$
|
-
|
|
$
|
-
|
|
Net cash provided by financing activities
|
$
|
-
|
|
$
|
-
|
|
|
$
|
|
|
|
|
|
Net increase (decrease) in Cash
and Cash Equivalents during the period
|
$
|
(98,507
|
)
|
$
|
(103,839
|
)
|
Cash and Cash Equivalents, beginning of period
|
$
|
227,088
|
|
$
|
435,630
|
|
Cash and Cash Equivalents, end of period
|
$
|
128,581
|
|
$
|
331,791
|
|
Operating Activities
Net cash flow used in operating activities during the six months
ended June 30, 2019 was $98,874, representing a decrease of $5,036 compared to
net cash flow used in operating activities of $103,910 during the six months
ended June 30, 2018. The decrease in the cash used in operating activities was
primarily due to the tightening budget in the period.
Investing Activities
Net cash flow used in investing activities during the six months
ended June 30, 2019 was $0, no change compared to net cash flow used in
investing activities during the six months ended June 30, 2018.
Financing Activities
Net cash flow provided by financing activities during the six
months ended June 30, 2019 was $0, compared to $0 during the same period of
2018.
Critical Accounting Policies
Principles of Consolidation
The consolidated financial statements include the accounts of
TransAKT BIO Agritech Ltd., collectively referred to within as we. us,
our, or the Company. All material intercompany accounts, transactions, and
profits have been eliminated in consolidation.
9
Use of Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles in the United States (GAAP) requires
management to make certain estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could differ
from those estimates.
Revenue Recognition
Revenues are recognized when finished products are shipped to
customers and both title and the risks and rewards of ownership are transferred
and collectability is reasonably assured. The Companys revenues are recorded
upon confirmed acceptance after inspection by the customers of the Company.
Exchange Gain (Loss):
During the six months ended June 30, 2019 and 2018, the
transactions of TransAKT Bio Agritech Ltd. were denominated in foreign currency
and were recorded in Hong Kong Dollar (HKD) at the rates of exchange in effect
when the transactions occur. Exchange gains and losses are recognized for the
different foreign exchange rates applied when the foreign currency assets and
liabilities are settled.
Translation Adjustment
The Company financial statements are presented in the U.S.
dollar ($), which is the Companys reporting currency, while its functional
currency is Hong Kong Dollar (HKD). Transactions in foreign currencies are
initially recorded at the functional currency rate ruling at the date of
transaction. Any differences between the initially recorded amount and the
settlement amount are recorded as a gain or loss on foreign currency transaction
in the consolidated statements of income. Monetary assets and liabilities
denominated in foreign currency are translated at the functional currency rate
of exchange ruling at the balance sheet date. Any differences are taken to
profit or loss as a gain or loss on foreign currency translation in the
statements of income.
In accordance with ASC 830, Foreign Currency Matters, the
Company translates the assets and liabilities into U.S. dollar ($) using the
rate of exchange prevailing at the balance sheet date and the statements of
operations and cash flows are translated at an average rate during the reporting
period. Adjustments resulting from the translation from HKD into U.S. dollar are
recorded in stockholders equity as part of accumulated other comprehensive
income.
Comprehensive Income
Comprehensive income includes accumulated foreign currency
translation gains and losses. The Company has reported the components of
comprehensive income on its statements of stockholders equity.
Advertising
Advertising expenses consist primarily of costs of promotion
for corporate image and product marketing and costs of direct advertising. The
Company expenses all advertising costs as incurred.
Income Taxes
The Company accounts for income taxes in accordance with ASC
740, Income Taxes, which requires that the Company recognize deferred tax
liabilities and assets based on the differences between the financial statement
carrying amounts and the tax basis of assets and liabilities, using enacted tax
rates in effect in the years the differences are expected to reverse. Deferred
income tax benefit (expense) results from the change in net deferred tax assets
or deferred tax liabilities. A valuation allowance is recorded when, in the
opinion of management, it is more likely than not that some or all of any
deferred tax assets will not be realized.
10
Statement of Cash Flows
In accordance with generally accepted accounting principles
(GAAP), cash flows from the Companys operations are based upon the local
currencies. As a result, amounts related to assets and liabilities reported on
the statement of cash flows will not necessarily agree with changes in the
corresponding balances on the balance sheet.
Concentration of Credit Risk
Financial instruments that potentially subject the Company to
concentrations of credit risk are accounts receivable and other receivables
arising from its normal business activities. The Company has a diversified
customer base. The Company controls credit risk related to accounts receivable
through credit approvals, credit limits and monitoring procedures. The Company
routinely assesses the financial strength of its customers and, based upon
factors surrounding the credit risk, establishes an allowance, if required, for
uncollectible accounts and, as a consequence, believes that its accounts
receivable credit risk exposure beyond such allowance is limited.
Cash and Cash Equivalents
Cash and cash equivalents include cash in hand and cash in time
deposits, certificates of deposit, and all highly liquid debt instruments with
original maturities of three months or less.
Fair Value of Financial Instruments
In the first quarter of fiscal year 2008, the Company adopted
Accounting Standards Codification subtopic 820-10, Fair Value Measurements and
Disclosures (ASC 820-10). ASC 820-10 defines fair value, establishes a
framework for measuring fair value, and enhances fair value measurement
disclosure. ASC 820-10 delays, until the first quarter of fiscal year 2009, the
effective date for ASC 820-10 for all non-financial assets and non-financial
liabilities, except those that are recognized or disclosed at fair value in the
financial statements on a recurring basis (at least annually). The adoption of
ASC 820-10 did not have a material impact on the Companys financial position or
operations.
Effective October 1, 2008, the Company adopted Accounting
Standards Codification subtopic 820-10, Fair Value Measurements and Disclosures
(ASC 820-10) and Accounting Standards Codification subtopic 825-10, Financial
Instruments (ASC 825-10), which permits entities to choose to measure many
financial instruments and certain other items at fair value. Neither of these
statements had an impact on the Companys unaudited condensed consolidated
financial position, results of operations or cash flows. The carrying value of
cash and cash equivalents, accounts payable and short-term borrowings, as
reflected in the balance sheets, approximate fair value because of the
short-term maturity of these instruments.
Stock-based Compensation
The Company records stock-based compensation expense pursuant
to ASC 718-10, "
Share Based Payment Arrangement
, which requires
companies to measure compensation cost for stock-based employee compensation
plans at fair value at the grant date and recognize the expense over the
employee's requisite service period. The Companys expected volatility
assumption is based on the historical volatility of Companys stock or the
expected volatility of similar entities. The expected life assumption is
primarily based on historical exercise patterns and employee post-vesting
termination behavior. The risk-free interest rate for the expected term of the
option is based on the U.S. Treasury yield curve in effect at the time of grant.
Stock-based compensation expense is recognized based on awards
expected to vest, and there were no estimated forfeitures as the Company has a
short history of issuing options. ASC 718-10 requires forfeitures to be
estimated at the time of grant and revised in subsequent periods, if necessary,
if actual forfeitures differ from those estimates.
Net Loss Per Share
The Company has adopted Accounting Standards Codification
subtopic 260-10, Earnings Per Share (ASC 260-10) which specifies the
computation, presentation and disclosure requirements of earnings per share
information. Basic earnings per share have been calculated based upon the
weighted average number of common shares outstanding. Common equivalent shares are excluded from the computation of
the diluted loss per share if their effect would be anti-dilutive.
11
Intangible Assets
Intangible assets include a patent. With the adoption of FASB
ASC Topic 350, Intangibles (formerly SFAS No. 142), intangible assets with a
definite life are amortized on a straight-line basis. The patent is being
amortized over its estimated life of 10 years. Intangible assets with a definite
life are tested for impairment whenever events or circumstances indicate that a
carrying amount of an asset (asset group) may not be recoverable. An impairment
loss would be recognized when the carrying amount of an asset exceeds the
estimated undiscounted cash flows used in determining the fair value of the
asset. The amount of the impairment loss to be recorded is calculated by the
excess of the assets carrying value over its fair value. Fair value is
generally determined using a discounted cash flow analysis. Costs related to
internally develop intangible assets are expensed as incurred.
Recent Accounting Pronouncements
The FASB has issued Accounting Standards Update (ASU) No.
2019-01, Leases (Topic 842): Codification Improvements.
The new ASU aligns the guidance for fair value of the
underlying asset by lessors that are not manufacturers or dealers in Topic 842
with that of existing guidance. As a result, the fair value of the underlying
asset at lease commencement is its cost, reflecting any volume or trade
discounts that may apply. However, if there has been a significant lapse of time
between when the underlying asset is acquired and when the lease commences, the
definition of fair value (in Topic 820, Fair Value Measurement) should be
applied.
The ASU also requires lessors within the scope of Topic 942,
Financial ServicesDepository and Lending, to present all principal payments
received under leases within investing activities.
Finally, the ASU exempts both lessees and lessors from having
to provide certain interim disclosures in the fiscal year in which a company
adopts the new leases standard.
Subsequent Events
We have evaluated all events or transactions that occurred
after June 30, 2019 up through the date the Company issued these financial
statements.
Off-Balance Sheet Arrangements
We have no significant off-balance sheet arrangements that have
or are reasonably likely to have a current or future effect on our financial
condition, changes in financial condition, revenues or expenses, results of
operations, liquidity, capital expenditures or capital resources that are
material to stockholders.
Inflation
Our opinion is that inflation has not had, and is not expected
to have, a material effect on our operations.
12
Going Concern
The Company has incurred a net loss attributable to common
stockholders of $100,243 and $99,639 during the six months ended June 30, 2019
and 2018, respectively, and had an accumulated deficit of $22,659,079 and
$22,558,836 as of June 30, 2019 and December 31, 2018, respectively.
The accompanying consolidated financial statements have been
prepared assuming that our company will continue as a going concern. This basis
of accounting contemplates the recovery of our companys assets and the
satisfaction of liabilities in the normal course of business. This presentation
presumes funds will be available to finance ongoing research and development,
operations and capital expenditures and permit the realization of assets and the
payment of liabilities in the normal course of operations for the foreseeable
future.
The ability of our company to continue research and development
projects and realize the capitalized value of proprietary technologies and
related assets is dependent upon future commercial success of the technologies
and raising sufficient funds to continue research and development as well as to
effectively market its products. Through June 30, 2019, our company has not
realized commercial success of the technologies, nor have they raised sufficient
funds to continue research and development or to market its products.
There can be no assurances that there will be adequate
financing available to our company and the consolidated financial statements do
not include any adjustments to reflect the possible future effects on the
recoverability and classification of assets or the amounts and classification of
liabilities that may result from the outcome of this uncertainty.
Our company has taken certain restructuring steps to provide
the necessary capital to continue its operations. These steps included: (1)
Tightly budgeting and controlling all expenses; (2) Our company plans to
continue actively seeking additional funding opportunities to improve and expand
upon our product lines. (3)The Company is seeking for other business
opportunities to create sources of income.
At this time, we cannot provide investors with any assurance
that we will be able to raise sufficient funding from the sale of our common
stock or through a loan from our directors, shareholders, or investors to meet
our obligations over the next twelve months. We do not have any further
arrangements in place for any future debt or equity financing.